Lack of policy risks exacerbating existing inequalities

The IFS has warned that the current coronavirus pandemic has not only bought existing health inequalities to the fore, but could risk highlighting further disparities in society.

The institute’s latest report warns that how we respond to the current crisis will determine whether the recovery is an inclusive one or ends up entrenching and widening social divisions.

Such risks include: a widening in wage and employment inequalities, where, long-term, more reliance on technology and working from home could favour the more highly educated at the expense of others; a further widening in health inequalities, where expected periods of unemployment, most likely to affect the low-skilled, are likely to have major detrimental long-term effects on health; a widening in ethnic inequalities, beyond what has already been seen since the pandemic began; a widening in generational inequalities, with those leaving school or university this year will enter the toughest labour market in more than a generation; a widening in gender inequalities, especially in the are of additional childcare and housework labouring on women more than men; and a widening in educational inequalities, potentially putting back years of slow progress on social mobility.

Avoiding the worst outcomes, and having a chance at the best, will require effective policy. For example: effective routes through further and vocational education will be more important than ever; the government will need to ensure that small firms that have a viable future survive the crisis, to avoid concentration of market power; effective welfare to work and training, which equip those who become unemployed with genuinely valuable skills, will be vital; and children, especially poorer children, who are missing out on school will need additional teaching post crisis.

Robert Joyce, deputy director at IFS and an author of the report, said: "The crisis has laid bare existing inequalities and risks exacerbating them, but some of its legacies might also provide opportunities. Government will need to be on the front foot in laying the groundwork for a strong and inclusive recovery even while still dealing with the immediate crisis. If, for example, we can limit now the severity of career disruption, the widening of health and educational inequalities, or the extent to which small firms that had a productive future are squeezed out by larger established competitors, policy’s job in years to come will be much less difficult than if it is trying to limit or undo the damage."